Consultation on Mandatory Client Money Protection Schemes for Property Agents

Published on Wed, 1st Nov 2017 09:00

Following a review of the suggestion that all agents should operate some kind of Client Money Protection (CMP) scheme the Government has launched (another) consultation on how this should be implementd.

This followed a working party that made the following recomendations:-

  1. The Government uses its powers in the Housing and Planning Act 2016 to make client money protection mandatory and gives further consideration as to how to manage implementation and enforcement. 

  2. Minimum terms and conditions of cover and agreed standards are dictated either by Government or a lead enforcer to ensure that schemes are consistent in their approach, underwriting and claims payouts.

  3. Enforcement is by local authorities, primarily Trading Standards but with flexibility to allow enforcement by local authority private sector housing teams that have regular contact with landlords, letting agents and tenants.

  4. Providers of client money protection, redress schemes and Trading Standards share information to ensure that compliance can be checked.

  5. The Government considers authorising a prime authority for enforcement, recognising client money protection schemes and providing up to date information. This authority should hold information that can be shared with other relevant organisations on which agents are compliant with the requirement to trade with client money protectionI

  6. f an agent is found to be handling client money without having client money protection, they should be fined or shut down. Agents who receive fines for non-compliance should not be permitted to continue to handle client money.

  7. The Government, or its appointed authority, should issue guidance and ensure sufficient communications to support implementation.

  8. British Bankers Association in liaison with the Government to produce guidance for banks on enabling the opening of client bank accounts without the need for evidence of due diligence on individual landlords.

  9. Measures on client money protection are linked to the work underway on the ban on letting agent fees for tenants. Any other changes to the sector should be considered in the round and implemented in a sensible and coherent way.

  10. Implementation of mandatory client money protection should be done on a transitional basis.

The full report can be found here.